The Globalist Quiz

The weekly quiz is provided by the Globalist, a daily online feature service that covers issues and trends in globalization. The nonpartisan organization provides commercial services and nonprofit educational features.

QUESTION

According to the World Bank, there are approximately 1.3 billion people who live on $1.25 dollars (or less) per day, measured on a purchasing power basis. That amounts to, at most, about $460 per year. We wonder: If you added these people's incomes, the sum would be equal to the total income of what percentage of richest Americans?

ANSWER

A. Top 10 percent

B. Top 5 percent

C. Top 3 percent

D. Top 1.1 percent

A.

Top 10 percent is not correct.

The top 10 percent of Americans, measured in household income terms, are a group of a little over 30 million people. They have an average per capita income of just over $80,000 annually on an after-tax basis. That means that as a group they make almost $2.5 trillion each year. In contrast, the poorest 1.3 billion people -- even assuming they all lived exactly at the very upper edge of the absolute poverty line of $1.25 per day (and many of them do not) -- would make less than $600 billion as a group. That is less than a quarter of the amount received by the richest 10 percent of Americans.

B.

Advertisement

Top 5 percent is not correct.

The top 5 percent of Americans on average each make more than $100,000 per year after taxes. Note that these are the richest 5 percent of Americans measured by their family per capita income. This obviously includes many children whose incomes are zero. That indicates not only that they live in wealthy households, but that their parents make multiples of the per person annual figure of $100,000. The total income of the 5 percent of richest Americans is $1.6 trillion a year. This is almost three times the combined income of 1.3 billion poorest people in the world.

C.

Top 3 percent is not correct.

The top 3 percent of Americans make on average about $125,000 per person. As a group, their total income is 1.1 trillion, almost twice as much as the combined income of the world's poorest 1.3 billion people. Because the 1.3 billion poorest people earn their meager incomes in different currencies, we use the measurement of purchasing power parity to make them comparable. Purchase power parity means that $1 in India (or Cambodia or Bolivia) would buy the same amount of goods and services as $1 in the United States.

D.

Top 1.1 percent is correct.

The top 1.1 percent of Americans -- more than 3 million people living in the richest U.S. households -- make on average about $180,000 per capita, after taxes. As a group, they earn almost exactly $600 billion a year. Thus, the total amount of income received annually by the top 1.1 percent of Americans exactly matches the $600 billion income of the poorest 1.3 billion people.